Islamabad Capital Territory

Islamabad | ReNews Pakistan The Federal Board of Revenue (FBR) has directed its field formations not to reject requests from taxpayers seeking revision of income tax returns in light of the Federal Constitutional Court’s (FCC) ruling against Section 7E of the Income Tax Ordinance, opening the way for potentially widebranging refunds of property related tax. The development follows an FBR letter dated September 23, 2026, addressed to all Chief Commissioners Inland Revenue of Large Taxpayer Offices (LTOs), Corporate Tax Offices (CTOs) and Regional Tax Offices (RTOs). The letter directs field formations that requests received from taxpayers for revision of returns filed in light of the FCC’s order “shall not be rejected.” The FBR has further instructed that where revision of a return results in a refund becoming due, the subsequent refund application “shall also be processed expeditiously, in accordance with the applicable law and procedure.” The directive addresses a significant procedural gap that had emerged following the FCC decision. Until now, the tax authority had neither issued specific guidance nor prescribed a formal application mechanism or forum for taxpayers seeking refunds, leaving affected taxpayers in considerable legal and financial uncertainty. Chairman of the Lahore Tax Bar Association’s Public Interest Litigation Committee (LTBA-PILC) described the FBR directive as a landmark development, particularly because Section 7E was struck down in its entirety. Section 7E imposed a 5% deemed income tax on specified immovable properties, based on their fair market value as assessed by the FBR. The provision applied to qualifying properties above the prescribed threshold, including properties valued at more than Rs 25 million. According to the LTBA-PILC, the potential refund universe could therefore be extensive, covering taxpayers who had paid the levy under the now invalidated provision. However, Butt cautioned that the latest FBR directive has a narrowly defined scope. He said the letter is confined to the “single agenda item” of Section 7E revisions and refunds and should not be interpreted as extending to other tax matters. A separate issue concerns Super Tax under Section 4C. According to the LTBA-PILC, the FCC upheld the validity of the provision but excluded certain exempt capital gains and other exempt income from its application, including specified gains relating to immovable property held beyond the prescribed holding period and inherited property. The mechanism for refunding amounts potentially affected by these exclusions has yet to be notified by the FBR. Butt reiterated the LTBA-PILC’s earlier proposal that, until a comprehensive refund mechanism is introduced, amounts collected under Sections 7E and 4C could be allowed as adjustments against taxpayers’ tax liabilities for 2026. He also urged the FBR to extend the expedited treatment now provided for Section 7E claims to outstanding Super Tax refund matters, arguing that a clear and uniform mechanism would provide greater certainty to taxpayers and reduce prolonged disputes over refunds.

Islamabad : ReNews Pakistan
The Capital Development Authority (CDA) is set to begin construction of the long-awaited Kashmir Chowk Underpass on Murree Road, with groundbreaking expected shortly after September 27 as preparatory work gathers pace at the project site.
According to CDA officials, the authority has accepted the bid for the underpass and awarded the construction contract to Habib Construction Services (HCS). The company submitted a financial bid of Rs 1.45 billion against the tender’s estimated cost of Rs 1.486 billion.
Preparatory activities have already started at the site, including clearing and grubbing work. The CDA is also working on traffic management arrangements and the relocation of utility services to ensure that construction can proceed without major disruption.
The project is planned at Kashmir Chowk, also known as Dhokri Chowk, on Murree Road near Islamabad Club. The underpass is intended to improve traffic movement at the busy intersection and provide a dedicated route for vehicles travelling between Islamabad and Rawalpindi.
Under the proposed traffic arrangement, vehicles travelling towards Rawalpindi from the Serena side will use the underpass, while traffic heading towards Murree will pass over the roof of the structure.
The tender documents specify a 90 day completion period for the project. However, CDA officials have indicated that the authority is pursuing a fast-track execution plan under which HCS is expected to complete the underpass within approximately two months.
The design of the project was prepared by the Lahore team of the National Engineering Services Pakistan (NESPAK). The CDA has directed that construction remain within the approved financial allocation and that unnecessary design or scope changes be avoided to prevent additional costs.
The authority is also expected to finalise traffic diversion arrangements before major construction activity begins, as the project is located on an important route connecting Islamabad with Rawalpindi and Murree.
With site preparation already underway, the Kashmir Chowk Underpass is set to become another major road infrastructure project aimed at easing congestion and improving traffic flow along one of the capital’s key corridors.

Islamabad | ReNews Pakistan
Income tax collection from Pakistan’s real estate sector fell sharply during the first two months of the current fiscal year, declining by around 29% to Rs 28 billion in July-August 2026 from Rs39.4 billion collected during the corresponding period last year, according to tax officials and Federal Board of Revenue (FBR) data.
The decline represents a reduction of approximately Rs 11.2 billion in revenue from the property sector despite expectations of increased activity in real-estate transactions. The fall has emerged after the government significantly reduced advance income-tax rates on the sale and purchase of immovable property under the Finance Act 2026-27.
The latest figures show that the reduction in property transaction taxes has had a direct impact on withholding-tax receipts. Under the revised tax structure, advance tax on the sale of property was reduced by 50%, with three previous slabs consolidated into a single 2.75% rate, compared with the earlier rate of up to 5.5%.
As a result, advance income-tax collection from property sales dropped from Rs27 billion to Rs 18.4 billion during July-August, registering a decline of Rs8.6 billion, or 32%.
Tax collection on property purchases also recorded a substantial decrease. The advance tax rate was reduced from 2.5% to 1.25%, following which collections fell from Rs 12.4 billion to Rs 9.7 billion. This represents a reduction of Rs 2.7 billion, or 22%, over the same period last year.
The contraction in property-sector tax receipts has also widened the difference between real estate and salaried taxpayers. Salaried individuals contributed Rs 91 billion in income tax during July-August, compared with Rs 28 billion from the real estate sector. The salaried class therefore paid around 225% more income tax than the property sector during the two-month period.
According to the reported data, income-tax collection from salaried taxpayers increased by Rs 6.3 billion, or 7.5%, compared with the first two months of the previous fiscal year. The government had also provided tax relief to salaried individuals in the 2026-27 budget, including reductions of up to 3% in applicable tax rates, abolition of the 9% surcharge linked to the highest tax rate and an increase in the income threshold for the 35% maximum rate from Rs 4.1 million to Rs 7 million annually.
The contrasting performance has renewed attention on the structure of taxation across different segments of the economy. While the real estate sector received substantial relief through lower transaction taxes, its tax contribution declined considerably during the opening months of the fiscal year.
The decline also comes against a broader slowdown in FBR revenue performance. The tax authority reportedly missed its August collection target by Rs 27 billion, with overall growth remaining almost flat during the month. FBR had collected Rs13.01 trillion during the previous fiscal year, an increase of about 11% over the preceding year.
The latest real-estate figures are particularly significant for Pakistan’s property market because transaction-related taxes form an important component of the government’s revenue collection from the sector. Lower tax rates can reduce the amount collected on each transaction, while their impact on transaction volumes and overall market activity may become clearer as more monthly data becomes available.
For the property industry, the figures therefore present a mixed picture: the reduction in advance taxes has lowered the immediate tax burden on property buyers and sellers, but it has simultaneously reduced government receipts from real-estate transactions.
The July-August figures represent only the first two months of FY2026-27. Further data will be required to determine whether the decline reflects primarily the impact of lower tax rates or also indicates changes in the volume and value of property transactions.